IDBI Bank seeks bids to sell 13.71 per cent stake in SIDBI

By: | Published: September 8, 2017 3:22 AM

Public sector lender IDBI Bank on Thursday sought bids to sell 13.71% stake in SIDBI.

IDBI Bank, IDBI Bank news, IDBI Bank latest news, IDBI Bank sidbi, IDBI Bank stake, IDBI Bank stake sale, IDBI Bank sidbi stakeThe sale is part of IDBI Bank’s plan to raise capital by divesting non-core assets. (Representative Image: Reuters)

Public sector lender IDBI Bank on Thursday sought bids to sell 13.71% stake in Small Industries Development Bank of India (SIDBI). According to a source, the bank has already identified a buyer for the remaining 2.54% its owns in SIDBI. Last month, the lender had mandated SBI Capital Markets (SBI Caps) to look for a buyer for its entire stake of 16.25% but had to extend the bid submission deadline in more than one occasion owing to tepid investor response. “Although we have identified a buyer for the 2.54% stake, a few formalities are yet to be completed and we hope to sell the remaining stake in the latest round,” a banker said.

IDBI Bank is the second-largest shareholder in SIDBI after State Bank of India (SBI) which owns 16.73%. Other shareholders include the government of India (15.4%), Life Insurance Corporation (12.21%), Punjab National Bank (3.99%) and other public sector banks and insurance companies. The advertisement announcing the stake sale said that investors require to submit a demand draft of Rs 29,500 in favour of the bank by September 14.

The sale is part of IDBI Bank’s plan to raise capital by divesting non-core assets. Mahesh Kumar Jain, managing director and chief executive officer, IDBI Bank had said in June that it would sell Rs 5,000 crore of non-core assets in FY18 to bolster its capital base. The bank had formed a committee to work around right valuations. The bank has, so far, received `1,861-crore capital infusion from the government in FY18.

Meanwhile, in May, the Reserve Bank of India (RBI) had initiated a prompt corrective action (PCA) for IDBI Bank. The action was prompted by IDBI Bank’s high net non-performing assets (NPAs) and negative return on assets (RoA). In Q1FY18, the bank’s net NPA ratio stood at 15.8% while the RoA stood at -1%.

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